BIG OIL...the root of all evil, right?

Well we have to blame someone for the high price of oil, don't we? Let's crack down on those oil speculators and oil companies for driving up the price of oil and all will be right with the world again, right? WRONG!

The price of oil or any other commodity is driven by supply and demand. Yes, speculators may drive up the price, but the higher prices will only hold if demand equals or exceeds the supply. If not, the speculators who got in late will run for cover and sell their positions driving the price down. Eventually the price will settle at the appropriate market level. This is basic economics, yet I hear people whine that the government should get involved to crack down on speculators. Even Obama is touting this in his ads to bring the price of oil down. Yeah, that's what we need, government involved in controlling those that invest in oil and those big oil companies like they are the root of all evil. The people who vote on these principals are absolutely clueless. If you trade or sell anything, aren't you trying to get the best price? Maybe the government should crack down on you for driving prices up on whatever you are selling because I want your product for a cheaper price! See how ridiculous this is?

Those people that speculate take on a great amount of financial risk. For example, attempting to ride piggyback on anything that is rising or falling in price at a dramatic rate to make money is a dangerous path if you don't know what you are doing. It is high stakes gambling. But, if they are willing to accept these huge risks they also deserve to reap the potential huge rewards. In the end prices will always settle at an equilibrium. The extreme prices are only temporary. Speculators are needed in the market (especially in the commodity markets) and trying to eliminate this group of investors will cause many undesirable issues. The high price of oil will be the least of our problems.

If you are really serious about lower oil prices or lower prices for anything, then reduce your demand for that product. There are always alternatives. Having the government controlling a free market and the price of anything is a recipe for disaster.